Tag Archives: email

Internet Industry

Thoughts on Facebook’s rumored entry to email

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Image courtesy of husin.sani

I’m a bit surprised that Facebook is (rumored to be) entering the email market.   Partially my surprise is that consumer email feels like a mature market and I expect Facebook to be concentrating on areas where more innovation and value creation is possible.   The rest of my surprise is why Facebook book wants to enter a space that’s not a great business for any of the incumbents.  EMail is essential to Yahoo and AOL for the recirculation opportunities it provides to better monetizing channels but in and of itself, email does not move the needle for anyone today.

Here’s my take on the pros and cons for Facebook entering the email market:

The Downside

1) Free consumer email is a tough business

Being an email provider is expensive because you have store to an ever growing amount of old emails essentially forever even though they are rarely, if ever, viewed.   Being rarely viewed means it’s impossible to monetize those petabytes of messages eating up storage space in the data center.   In the old days before GMail changed consumer expectations forever, storage space for free accounts was sharply limited and additional space meant highly profitable premium revenue.

Compounding the problem, email page views monetize poorly compared to other types of content.  Partially this is because the incumbent providers (Yahoo, AOL, Windows Live) with exception of GMail do not target using email content.  My suspicion is even targeting off of email content does not help that much anyway.  Advertising is valuable either when the purchase intent is high (where search is king) or there’s value in brand affiliation (full page New York Times ad).   Email has neither of these characteristics and is likely getting worse on purchase intent.  No one emails anymore to ask which camera, laptop, cell phone they should buy since it’s easier and hipper to ask in a Facebook status.

2) EMail does not fit well into the walled garden model of Facebook

Facebook messaging today is an unpolluted stream where messages are almost certain to have been sent by person.  There’s no outside spam.  EMail is the exact opposite both due to its history and the expectations around it.    EMail started off with no way to verify sender identity and thus invites spam and scams.  There have been some technical fixes (DKIM, SPF) but at the end of the day you really do not know who is sent a message.   It’s also expected to be ubiquitous and completely interoperable thus removing the option of excluding bad actors from the system.

In contrast, Facebook can kick anyone out of their network.  The Stuff White People Like article on Facebook is humor but its underlying point resonates with me.  The nice, safe neighborhood feel of Facebook is a key part of its success.  Most people over 30 were never going take to the generally messiness of My Space.  Opening up your Facebook account to email, is almost like inviting the world to come by and litter on your front lawn.  And there’s no way to “de-friend” someone sending you email.  None of this is to say email is not an essential method of communication in the modern world.  I just don’t see adding email fits with the positioning that’s made Facebook so successful.

The Upside

Facebook does have several things going for it in the email market:

1) Capability to run large scale operations at low cost

Facebook has the operational know how to run a email operation at lower cost than most of the incumbents other Google.  A cost advantage is always a huge competitive advantage in a low margin market.  It’s harder to leverage though in email since pricing to the consumer is already zero.   The price of an email account is really the amount of ads and Google has been able to effectively exploit their low costs through less intrusive advertising.

2) Good targeting data

Facebook already knows so much about their users they do not need to use email for targeting.  How valuable this makes email to them is a function of how much excess ad inventory they already have.  If Facebook ad inventory is already selling out at least for certain segments, adding email will be valuable simply by boosting ad inventory.  If they are already swimming in inventory which is going for fire sale prices, there’s not a lot of money to be made.

3) Keep younger users away from Google and Yahoo

Although the kids of today do not have much use email, they will get older and need to start interacting with the grown-up world which still largely runs on email.  At that point, they will need an email address.  Providing them though Facebook keeps those users from deepening or even creating their relationship with Google or Yahoo which may benefit Facebook in the long run.   However, that benefit is mitigated by the Google and Yahoo’s failure to be at all competitive in the social space.

4) Social Graph

Facebook’s biggest advantage in any area they enter into is their owership of all that social graph information.  Maybe they have found a clever way to leverage it with email.  I’m a bit skeptical because of the inherent identity problems with email.

I’m curious to see what Facebook has come up or if the rumors are even in the right ballpark.  However, I doubt I’ll be creating myself a Facebook email address.  GMail serves my needs really well today.

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Internet Industry

Email Is Not Dying

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Image courtesy of husin.sani

This week Facebook COO Sheryl Sandberg claimed email is probably going away. This claim is more self-serving marketing fluff than a serious prediction that’s likely to be realized. However, it does point to an important shift in electronic communication: the center of gravity of personal communication has shifted away from email and instant messaging to social media and text messaging. The providers of email and IM including Yahoo, Google and AOL will be hurt by this shift as users pay less attention to the older mediums. However, email is not going to disappear anytime soon.

The primary shift is in personal  communication. Status updates substitute for emails or IMs. Picture sharing is easier and more satisfying by Facebook than by email. The broadcast nature of social media means it takes less effort to keep friends and family up to date. And even when person-to-person communication is desired, the context rich nature of the social media means a Facebook message is often preferable to an email. Some of the best evidence of the size impact is Neilsen’s recent study in the UK showing that instant messaging has has dropped from 14% to 5% of internet usage time.

Email is not going to disappear though. Email is an asynchronous messaging medium thats private, addressable to a particular person and ubiquitous. Such a medium provides enough value that it won’t disappear without one with similar properties taking its place. EMail is needed for notifications for everything from my credit card bill is ready to there’s a sale at my favorite retailer. Conceivably these could move to another mechanism with similar properties like Facebook message but then my Facebook inbox would be just overflowing as my email inbox. Today, part of the value of social media messages for person-to-person communication is that the channel is free of spam and relatively uncrowded. If Facebook opens up it’s messaging to these business-to-consumer communications, it becomes just another crowded channel and while I may care what my friends are up, I really care very little about what bank did today so the inherent advantages of the social mediums no longer matter.

The other reason that email won’t disappear is that there’s no viable substitute for business communication. An email replacement for business communication requires both ubiquity so anyone can talk to anyone and the ability to keep the communication within an organization both private and secure. There’s nothing on the horizon that meets these requirements. Google Wave is a contender but the slow adoption thus far is an strong indicator that it’s going to be really hard to get people change their established behavior. Additionally, Google Wave’s complexity is hindering its diffusion outside of the earliest adopters.

Sandberg’s thesis is what teens do today is predictive of the future and since only 11% of teens check email daily, email is going to disappear. The flaw in this argument is that teens don’t have the needs that drive email usage. They don’t need to get notifications from their bank or cable or cable company that their bill is ready.  They have no business communication needs. They only communicate person-to-person or person to small group and that’s the area wher the shift away from email has happened.

A big impact of the center of gravity shifting will be on marketers who have been effectively utilizing email. Without personal communication, the value of email to users is lower since it’s now all notifications or stuff that only might be interesting. Lower value means less of the mental attention that email marketers and advertisers on email services need to connect with audiences.  It’s akin to the difference between scanning the news headlines to see if there is anything of interest and reading an article in depth. There’s less mental engagement and less time spent on a scan.

The long run solution for marketers will be the same one Sanberg advocates which is add social media to the  marketing mix. But there won’t be a dramatic death of email, at least until there is something it supersede for notifications and business communication.  The teens of today will start using email when grow up an have the need for it.

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